ACCA calls for practical thinking as UK Chancellor plans cut to corporation tax

ACCA (Association of Chartered Certified Accountants)

The ACCA (Association of Chartered Certified Accountants) has called for practical thinking to be the priority as stories emerge stating that the Chancellor George Osborne will put a corporation tax cut at heart of his ‘Brexit’ recovery plan.

Responding to the news, Chas Roy-Chowdhury, head of taxation at the ACCA said: “It is understandable that the Chancellor wants to show that the UK is still ‘open for business’ and hinting at the likelihood of a future cut to corporation tax is a clear signal of his intent to businesses thinking about leaving the UK.

"However, the reality is that any change to tax policy should be closely aligned with what the EU does, at least in the short term, simply because that will create much greater certainty for businesses. We must be mindful that to introduce tax incentives that were contrary to the EU’s rules against unfair tax competition could actually put companies off due to worries about retaliation.

“For example, the implementation of the OECD Base Erosion and Profit Shifting (BEPS) outcomes will have to be identical to what is agreed at the EU level.

“So while some Brexiteers may already be talking about autonomy, I think the reality is there will need to be very close alignment with the EU until we know more about how the UK’s relationship with it may change.

“What we need now is for the UK Government to put 100% of its effort into its engagements with the European Commission and international tax engagements. Until Article 50 is triggered, we are still fully paid up EU members and we cannot take our eye off the ball when it comes to business as usual matters.

“Any incentives to investment the UK plans to offer need above all else to be practical solutions rather than PR moves. The UK is like a full service airline rather than a low cost one and this means it still needs to obtain a full spectrum level of tax revenues. The UK might lower corporation tax but it will still retain income tax and VAT levels.”